Part 1: Achieving outcomes

Role of the Department

Our Role

The Department of Building and Housing (the Department) was established in November 2004, bringing together building and housing sector policy and related regulatory functions and dispute resolution services from across a range of government agencies, into one organisation.

The consolidation of the Government's building- and housing-related activities:

• ensures an effective regulatory system for the building and housing sector
• delivers good-quality advice to the Government
• improves and streamlines services to the public.

Our Responsibilities

The Department is responsible for:

• ensuring an effective regulatory environment for the building and housing sector
• regulating the building and rental housing sectors
• delivering effective information, advice and dispute resolution services (including tenancy services and the Weathertight Homes Resolution Service (WHRS))
• providing purchase and monitoring advice to the Government on Housing New Zealand Corporation
• administering the State Housing Appeal Authority
• providing policy advice to the Government on the building sector and residential tenancy market, including emerging trends and issues
• providing policy advice on housing and building regulation
• providing advice on regulating the residential rental market
• managing occupational licensing within the building sector.

The Department works with Housing New Zealand Corporation on:

• defining housing outcomes for the sector
• analysing the housing environment, including monitoring the supply, quality and affordability of housing
• influencing the wider government sector to ensure it meets the Government's goals for housing
• working with other agencies to influence and promote delivering the Government's outcomes for the building and housing sector
• undertaking specific initiatives under the New Zealand Housing Strategy Programme of Action.

The legislation administered by the Department is outlined in Part 4.

Key achievements in 2006/07

The Department's key achievements in 2006/07 are mentioned throughout this report and some of these are highlighted below under the headings:

• Our contribution to Government Outcomes and Priorities
• New Zealand Housing Strategy
• Achieving by working with others.

These sections capture what is important to the Department in what we do, why we do what we do and how we do it. Ensuring we achieve by working with others is central to the activities of the Department. This approach underpins all our activities and achievements.

Our contribution to Government Outcomes and Priorities

The building and housing sector is an important contributor to New Zealand's economic and environmental performance and social wellbeing. It contributes around 5 percent to Gross Domestic Product and impacts on every person in New Zealand in terms of where we live and work, and how our communities function.

The sector has an important contribution to make to a sustainable economy, a sustainable environment and sustainable communities. It covers physical building and construction, building professionals and local authorities through to home and building owners, investors, landlords and tenants, and property managers.

Government influences the overall performance of the sector, the quality of building and housing, and the built environment. These contribute to our economic performance, to improved wellbeing and living standards for families and communities, and to a built environment that reflects who we are, where we live and how we live our lives in New Zealand.

The Department's role in this includes:

• setting building and housing performance standards and systems that deliver quality homes and buildings, and encourage and support good design and innovation in the built environment
• requiring transactions in the building and housing market to be done in ways that ensure openness and transparency, with appropriate protection for parties involved including consumers
• registration of building consent authorities - requiring that they be appropriately accredited and monitoring their performance in carrying out their building control functions
• providing information, guidance and services to landlords, tenants, building practitioners and consumers
• working with the sector to promote, encourage and support professional skills and behaviour and investment in these through training, education and ongoing professional development
• providing technical advice and detailed guidance to the building sector on technical issues, building systems and products
• undertaking research and working with the sector to set the forward research agenda for building systems, science and design
• providing dispute resolution services.

The Government has established key priorities for Economic Transformation, Families - Young and Old, and National Identity. The Department contributes to these goals through the outcome it is committed to achieve:

The people of New Zealand have access to quality homes and buildings that meet their needs, reflect our environment and contribute to a sustainable New Zealand.

The Department's 2006/09 Statement of Intent set out four intermediate outcomes we expect to see if we are progressing towards this goal:

• buildings and homes that perform well in the New Zealand environment
• a vibrant building, construction and housing sector with skilled building and housing professionals
• homes and buildings that meet the changing needs of New Zealanders
• confident owners, tenants and users.

These indicators have been further refined in the 2007/10 Statement of Intent.

The work of the Department contributes to the Government's three key themes in a number of ways including:

• Economic Transformation - by supporting the development of a sustainable economy based on innovation and quality
• Families - Young and Old - by sustaining family and community living standards
• National Identity - by supporting innovation and good design in the built environment.

Examples of the Department's specific contributions to the Government's three key themes are outlined on the following pages.

Economic Transformation

The Department contributes to the theme of Economic Transformation by supporting the development of a sustainable economy based on innovation and quality.

The Department's contributions include:

• implementation of the Building Act 2004
• Building Consent Authority Accreditation and Registration Scheme
• Licensed Building Practitioner Scheme
• Building Code review
• product certification scheme
• building standards, technical guidance and determinations.

Implementation of the Building Act 2004

The Building Act 2004 requires buildings to have attributes that contribute appropriately to the health, safety, physical independence and wellbeing of the people who use them. A greater emphasis has been placed on the needs of consumers (defined as occupiers of housing and other buildings) and on recognising the special place that houses have in people's lives.

The Act is a significant regulatory reform and will take 3 to 5 years to fully implement. This reform will result in the rollout of key systems around building consent authority accreditation, licensed building practitioners and product certification. A significant amount of other related work is being progressed, some of which is highlighted below, including the review of the Building Code.

Building Consent Authority Accreditation and Registration Scheme

As at 30 June 2007, 69 of the 87 territorial authorities and regional authorities had applied for accreditation as building consent authorities. This significant success has been achieved through hard work and commitment by councils, supported by a $3 million accreditation assistance package.

The majority of councils are expected to be accredited or close to completion of the accreditation process by 30 November 2007. The date by which territorial and regional authorities are required to be accredited has been extended to 30 June 2008.

Licensed Building Practitioner Scheme

The Building Practitioners Board and the Minister approved the Licensed Building Practitioner Rules after consultation with and support from sector industry representatives. The Rules are fundamental to and underpin the licensing scheme. They include the licence class standards which describe the competencies required by a practitioner to be licensed. The Rules are in preparation for the voluntary licensing scheme commencing on 1 November 2007.

Building Code review

The Building Act 2004 sets the legal framework for all building work. All building work, both in the design and construction of new buildings and in the upgrading of existing buildings, must comply with the Building Code.

The Building Code sets out performance standards that buildings must meet. It covers aspects such as health and safety, fire, access, moisture control, durability, energy efficiency, amenity, services and facilities.

During the year the Department progressed a comprehensive review of the Building Code as required by section 451 of the Building Act 2004, to ensure the Code:

• meets the requirements of the Building Act 2004
• is stated in sufficient detail to provide clear guidance on the performance standards that buildings must meet to ensure compliance
• supports innovation in building systems that meet quality standards.

The Department:

• received and analysed submissions on a first discussion document, released in May 2006, that addressed the shape and overall principles for a new Building Code
• convened workshops with people and organisations who made submissions on the discussion document
• held focus group meetings with a wide cross-section of building users
• published a synopsis of submissions on the discussion document in January 2007
• prepared, with input from the sector and other government departments and agencies, and submitted to the Minister for public consultation, a second discussion document that includes specific proposals for building performance requirements.

The second discussion document seeks public consultation in August and September 2007, with the Department on track to submit a report on proposals for change to the Code to the Minister by 30 November 2007, as required under the Building Act 2004.

The review of the Building Code will contribute to the Government's overall sustainability goals through planned improved performance requirements for buildings that will:

• enhance people's health, safety and wellbeing
• improve the energy efficiency of buildings
• take better account of 'whole of life' use of natural resources such as energy, water and construction materials.

Product certification scheme

A key element of achieving high-quality buildings is a well-functioning building industry, including reliable standards, testing and design guides for materials and processes used in construction.

During the year, the Department continued work on establishing a product certification scheme as provided for in the Building Act 2004 and in particular on a trans-Tasman scheme (CodeMark) that will be tied to international standards of quality and accountability.

By 30 June 2007, the scheme's rules (developed by the Australian Building Codes Board in consultation with the Department, Australian State and Territory governments, industry groups and prospective certification bodies) had been agreed to in principle by the Chief Executive.

Outstanding work that will be completed during the 2007/08 financial year comprises:

• the development of a formal agreement with the product certification accreditation body, the Joint Accreditation System of Australia and New Zealand (JAS-ANZ)
• putting in place the necessary regulations (as required by the Building Act 2004) covering the scheme's criteria and standards and JAS-ANZ's fees
• enactment of the amendments included in the Building Amendment Bill 2007 allowing JAS-ANZ to charge fees for accreditation services on a variable fees basis, and to provide for a power of suspension for a product certification accreditation body and a product certification body.

Further work will also be undertaken in 2007/08 on the management of legacy certificates of accreditation issued under the Building Act 1991.

The CodeMark scheme will provide greater assurance to the sector about building product performance when implemented.

Building standards, technical guidance and determinations

During the last quarter of the financial year, Building Code Clauses for E2 External Moisture, F4 Safety From Falling, F6 - formerly Lighting for Emergency now Visibility in Escape Routes, G13 Foul Water and G14 Industrial Liquid Waste were amended and came into effect.

Other initiatives over the year included:

• publishing ten amended Building Code Compliance Documents, clarifying and improving building and performance requirements
• work on eighteen New Zealand Standards that are cited as a means of Building Code compliance
• completing nine technical research projects with a number of others continuing
• developing and distributing guidance documents on earthquake-prone buildings, timber treatment, weathertightness principles, access for people with disabilities, and storage racking systems
• preparation of guidance on weathertightness remediation.

In terms of support for the sector, the Department:

• ran a seminar series on timber grading, weathertightness, and fire engineering design to inform and educate the sector on Code developments
• answered in excess of 3,000 technical enquiries received through the Services Centre
• participated and presented papers at numerous sector organisation conferences and meetings.

These initiatives contribute to ensuring building practitioners are well-informed, buildings are built properly the first time, and buildings perform well for their users in the New Zealand environment.

The Department issued 135 determinations during the year. One notification of appeal was received. A determination is a binding decision made by the Department. It provides a way of solving disputes or questions about the rules that apply to buildings, how buildings are used, building accessibility, and health and safety. The Department's determinations function contributes to ensuring the integrity of building regulatory processes.

Families - Young and Old

The Department contributes to the theme of Families - Young and Old by sustaining family and community living standards.

The Department's contributions include:

• supporting the effective operation of the rental housing market
• improving outcomes for the owners of non-weathertight homes
• energy efficiency initiatives
• monitoring and purchase advice on Housing New Zealand Corporation.

Supporting the effective operation of the rental housing market

The effective operation of the rental housing market contributes to the achievement of social and economic outcomes for New Zealanders. It is a market that has been growing and changing on both the demand and supply side. Over 33 percent of New Zealand households rent their homes. On the supply side, the private sector provides over 80 percent of this housing, characterised by many New Zealanders who own and operate a small number of properties for savings and investment purposes. It is important that the rental housing market works well.

The Department supports the effective operation of the rental housing market through its administration of the Residential Tenancies Act 1986. It provides tenancy services that support tenants and landlords to make well-informed decisions, operate with confidence in the rental housing market and resolve disputes.

In 2006/07 the Department completed a comprehensive review of the Residential Tenancies Act 1986. The changes to the Residential Tenancies Act 1986 are designed to clarify and enable better enforcement of landlords' and tenants' rights and responsibilities. A Bill incorporating these changes is expected to be introduced towards the end of 2007.

The Department also implemented significant changes to how it delivers tenancy services in 2006/07. These changes are designed to improve clients' access to services and better connect tenancy services to communities. The changes implemented in 2006/07 included:

• extending hours of operation of the free phone 0800 Tenancy advice line and providing access from mobile telephones to this service
• new tenancy tools and information available on an upgraded website
• ability to make applications to the Tenancy Tribunal online and pay by credit card
• introduction of Swift telephone mediation for a more rapid resolution of straightforward tenancy disputes
• face-to-face and mediation services extended to 85 locations, including 17 new locations
• education and information seminars targeted at selected landlord, tenant, industry and community organisations, including a national series of landlord seminars, 18 radio shows on Pacific radio, training for Citizens Advice Bureaux, budget and student services.

The Department also managed growing demand for its tenancy services with increases of 18 percent and 16 percent respectively in tenancy advice telephone enquiries and tenancy bond activity. Resources were reprioritised from the lodgement of tenancy bonds to manage this increase in demand, and to maintain services for clients in more time-critical areas of Tenancy Tribunal dispute applications, bond refund payments and answering telephone enquiries.

Improving outcomes for the owners of non-weathertight homes

A major focus for the Department in 2006/07 was the implementation of a suite of changes designed to improve the efficiency and effectiveness of the WHRS process. The changes were implemented in April 2007 following enactment of the Weathertight Homes Resolution Services Act 2006. The changes are designed to achieve better outcomes for affected homeowners.

The Department:

• implemented new assessment methodology and reports so homeowners have accurate and comprehensive assessment of the damage to their homes, both actual and probable, and the work needed to effectively repair their homes
• made improvements to case management with enhanced information and guidance material for claimants
• introduced a streamlined process for the resolution of lower value claims
• worked with the Ministry of Justice to implement an enhanced and more authoritative dispute resolution process, including the transfer of the adjudication function from the Department, establishment of the specialist Weathertight Homes Tribunal and time-limited mediation for WHRS claims
• worked with Housing New Zealand Corporation in the design and implementation of a targeted 2-year lending assistance pilot to assist eligible homeowners to undertake repairs to their homes
• worked with Local Government New Zealand to implement a protocol to provide WHRS claim information on affected properties to territorial authorities for inclusion on Land Information Memoranda, giving prospective purchasers access to authoritative information
• implemented the first year of a 2-year consumer awareness campaign for both leaky home owners and prospective home purchasers, including the enhancement of the ConsumerBuild website in partnership with the Consumers' Institute.

These changes are designed to enable faster and more effective resolution of weathertightness problems. The changes are expected to reduce the time it takes for claims to be resolved and should lower the legal and expert costs faced by both claimants and respondents. The Department also developed a 3-year monitoring and evaluation framework in 2006/07 to assess the effectiveness of the changes and whether the Government's objectives are being achieved. The Department will complete its first evaluation report to the Minister in May 2008.

Energy efficiency initiatives

During the year the Department was involved in an extensive programme of initiatives aimed to improve the energy efficiency performance of our buildings.

Improvements to the energy efficiency performance requirements in the Building Code and related Compliance Documents for house insulation, commercial lighting and the installation of solar water heaters were developed. These will progressively come into effect from mid-2007 to late 2008.

The development of further energy efficiency proposals relating to heating, ventilation and air-conditioning in commercial buildings, and domestic water heating, were also undertaken. Public consultation on these proposals closed at the end of June 2007 and analysis of submissions is under way.

The Department also led the development and delivery of an energy efficiency consumer awareness programme to encourage New Zealanders to use energy more wisely in their homes, leading to financial, health and environmental benefits. Working with other agencies including the Consumers' Institute, the Energy Efficiency and Conservation Authority and the Electricity Commission, a series of publications were developed including a newspaper insert and a booklet. These initiatives were supported by a nationwide television commercial campaign. Key messages of the campaign were:

• saving energy reduces your power/gas bills
• a warm home is a more comfortable and healthier one
• maintaining your property will retain or improve its value
• reducing energy helps the environment.

Monitoring and purchase advice on Housing New Zealand Corporation

The Department provides monitoring and purchase advice to the Minister of Housing in relation to Housing New Zealand Corporation (HNZC).

Advice was provided on key strategic documents (Letter of Expectations, Statement of Intent, Annual Report and Output Agreement) and related reporting. In addition, the Department initiated joint work with the Treasury to review the financial governance and output class structure for HNZC. The Department also provided support for the appointment of four new board members and the reappointment of one member.

The Department also provides governance advice on nine statutory boards, including HNZC, to both the Minister for Building and Construction and the Minister of Housing.

This year the Department worked on further strengthening relationships with these boards and on building an understanding of the performance targets monitored by the Department, including drafting Output Agreements for boards. The Department has also provided support for the appointment and reappointment of members to nine boards.

National Identity

The Department contributes to the theme of National Identity by supporting innovation and good design in the built environment.

The Department's contributions include:

• an integrated approach to the built environment
• the review of the Unit Titles Act.

An integrated approach to the built environment

There are a number of elements to achieving high-quality buildings and ensuring good design in the built environment. Key elements in the building system include:

• a well-functioning building industry, including skilled building professionals such as designers, architects, builders, tradespeople, manufacturers and consumers
• a sound legal framework for conducting business so all parties can be held accountable for their actions
• reliable standards, testing and design guides for materials and processes used in construction
• warranties to provide reassurance to building owners
• education and training to provide knowledge and skills to people involved in the building process.

The Department leads or contributes to all of these elements to ensure good design in the built environment. Other examples of the Department's contribution to an integrated approach to the built environment are the Department's work on building standards and the review of the Unit Titles Act 1972.

Review of the Unit Titles Act

The Department progressed the review of the Unit Titles Act 1972 during the year. Since 1972 when the Act first came into force, there have been major changes in the number, scale and nature of property developments in New Zealand. The Act has become outdated and is no longer able to provide a sound basis for the creation and sustainable management of intensive, multi-unit developments. The review of the Act has led to the decision to comprehensively amend the current unit titles regime. A Bill to repeal and replace the current Act is being drafted and is expected to be introduced in 2007/08.

New Zealand Housing Strategy

The Government is committed to ensuring people on low and modest incomes or with special housing needs receive the help they need to find and stay in affordable, good-quality housing. The Government's Housing Strategy sets out the priorities for housing and a programme of action over the next 10 years. The strategy covers sustainable housing supply, assistance and affordability, homeownership, the private rental sector, housing quality, sector capability and meeting diverse needs.

The Department is on the steering group overseeing the strategy. The Department, together with other agencies, continues to work on priority areas identified under the New Zealand Housing Strategy.

Examples of significant initiatives progressed in 2006/07 include:

• Housing Quality - improving the quality of New Zealand's housing stock. The Department is continuing to review the Building Code with input from consumers, the building industry and local government.
• Sector Capability - the Department is working with local government to implement the building consent authority accreditation provisions of the Building Act 2004. Building consent authority accreditation and a national licensing system for the building industry are part of a package of changes introduced by the Building Act 2004 to encourage better practices in building and construction. The Licensed Building Practitioner Scheme will contribute to lifting and recognising the professional standards and skills of building practitioners.

Achieving by working with others

Key to the activities and achievements of the Department is working with the building and housing sector. This sector includes:

• building and construction companies
• building and housing professionals such as architects, engineers, builders and building trades
• sector organisations
• building and home owners
• others with an interest in building and housing and the performance of the sector such as the Ministry of Economic Development, Ministry of Social Development and Ministry for the Environment.

Working actively with local government on the design of the Building Consent Authority Accreditation and Registration Scheme and supporting its implementation has been a key part of the Department's work and focus on lifting the capability and performance of local authorities' building control functions.

The Department contributed to the following whole-of-government initiatives during the year.

• The Steering Group established by the Ministry of Economic Development to oversee the development of the New Zealand Energy Strategy and the New Zealand Energy Efficiency and Conservation Strategy
• The Ministry for the Environment's Household Sustainability initiative
• The development of a consumer energy efficiency awareness programme, as lead agency in conjunction with the Consumers' Institute, the Energy Efficiency and Conservation Authority and the Electricity Commission
• The Ministry for the Environment's work in developing and implementing the SmarterHomes website designed to provide consumers with practical information on how to make homes more sustainable
• The Social Services Cluster (Ministry of Social Development, Housing New Zealand Corporation, Department of Building and Housing) initiatives in the housing sector

These initiatives contribute to the Government's overall sustainability goals, and demonstrate our commitment to working with others to achieve better building and housing outcomes.